16/09/2014 20:27
EURIBOR6
+0.53%
0.19
chart
EUR / RUB
+1.40%
50.0160
EUR / USD
+0.29%
1.2949
EUR / SEK
+0.05%
9.2376
Baltic temperature
  Up23.53%
  Freeze47.06%
  Down29.41%
Winners and losers
EEG1T +2.86%
BLT1T +2.71%
HAE1T +0.78%
JRV1T-11.02%
NCN1T-1.94%
PRF1T-1.84%
Turnover TOP
TKM1T633790.28
SFGAT100579.72
OEG1T23651.55
TAL1T21939.38
TVEAT14798.80
HAE1T11674.00
JRV1T5331.55
Exchange rates
Leedu litt3.4528 +0.00%
USD1.2949 +0.29%
SEK9.2376 +0.05%
LVL0.7028 +0.04%
Databases of Estonian companies
Back
Text size AAA Print

Tanilas: let’s turn Estonia into Monaco

THIS PUBLICATION HAS 29 COMMENTS
ADD YOUR COMMENT
As such, fresh thinking. However, European countries with significant corporate tax revenues have seen the respective revenues falling due to companies paying (or not paying) their taxes elsewhere. If the companies' profits will be taxed in Estonia, in a couple of years we'll see the companies posting their profits elsewhere.

Another problem with the proposal is - corporate tax is very volatile. The public sector can't adjust itself and its spending quickly enough - even if the public sector is lean. Moreover, as the public sector should try to make shocks in economy smoother - rather than amplifying them - coupling public spending with corporate profits is not a good idea.

What Estonia should do - immediately - is to release the employers from social tax. This tax should be collected from employees (whose gross salaries would be increased respectively) in order for people to see how much tax is actually collected from their work. Many Estonians think income tax is low in Estonia, but it's an illusion. Reply to the comment answer
~Jay [11.01.2013, 15:26]
No, they should abolish both, income (21% paid by employee) and payroll taxes (33% paid by employer) and we would then want to have a general tax rate (let's say 20% like the VAT) on anything else.
~knut albers [11.01.2013, 17:43]
What is this actually a year to become, this 2013? After all, the year of Common Sense?

And I already prepaired myself for a new wave of sh**storm.

Amazing! Finally some ideas popping up that could make actual sense!
~knut albers [11.01.2013, 17:48]
rate it
answer
Reply to the comment
The author makes good points and the fact that workers pay the social tax instead or employers is commendable as well.
In regards to Lihula and other small municipalities - they should be consolidated into larger units. Reply to the comment answer
~International Citizen [11.01.2013, 16:00]
rate it
answer
Reply to the comment
Interesting thought, but before becoming Monaco Estonia should abolish language exams before someone can become Estonian citizen. I don't think Novak Djokovich will learn Estonian in order so save some money. Reply to the comment answer
~kloty [11.01.2013, 17:16]
I think they got hubris from their swedish masters. I mean who believes that a country which has a cesspool like Narva in it could be something like a Monte Carlo.
~boozer eesti [11.01.2013, 17:46]
rate it
answer
Reply to the comment
Reading the title I started to laugh. Then I read the article and... chapeau! One of the best ideas I have been reading in a while. Guess only Monaco and Andorra are no income tax in Europe.

kloty: citizenship is not required to have a company here. Reply to the comment answer
~Prince Vlad [11.01.2013, 17:26]
rate it
answer
Reply to the comment
They should really cut down the booze. Why would ANY such individuals as Mika Hakkinen or Jenson Button relocate from Monaco to Estonia. Oh well knowing taste of women Mr.Hakkinen has he might, but not Jens. In order for turn it to Monaco you would need glamorous events and honest casinos for extremely wealthy who love luxury. Something the delusional estonian clowns will never achieve. Reply to the comment answer
~stop drinking [11.01.2013, 17:44]
rate it
answer
Reply to the comment
The author has no clue .. lol .. e.g. corporate tax rate in Estonia is already ~26,6% (21/79). Reply to the comment answer
~bluecowboy [11.01.2013, 18:45]
rate it
answer
Reply to the comment
We need more good ideas, lets keep trying. Maybe this one is not the best, but at least Tanilas is standing up and saying something, for which he should be supported.

However, about the idea: "Estonian Monaco" sounds nice as a catchy headline, but the reasoning is not sound. Removing personal income is a populist move but not structurally correct.

First, since the tax income loss is small, it means additional consumption is also small. 300m Euro is quoted, but businesses, both local and foreign can bring in billions of Euros, many times more - so by taxing them and encouraging THEM to move to Monaco = Estonia loses.

The top rich people are basically businesses themselves. They act through businesses, not personally, so taxing business encourages them to go elsewhere.

Taxing foreign companies more than local. Really, if Estonia was America and had the highest GDP in the world perhaps it can afford to lose all foreign investments, but to start to attack foreign people and investments is very politically popular but again, eventually the Estonian people lose. Think about the end point of this closed policy - Romania's Nicolae Ceaușescu.

Second, the idea that suddenly many wealthy people will come to Estonia and spend huge sums here is quite unlikely. Monaco is warm, on the sea and you have all the products of France in the region. Estonia has a small range of restaurants, products and opportunities to spend money. Most of the consumption would still go abroad. Some would come yes, but enough to balance billions of business investment? Unlikely.

Third, playing with tax in this way goes against the developing EU regulations, so Estonia would eventually be fined.

In summary then, it is better to support business because the business generates more income which drives the economy and pays more to the people. An open policy has been working well for Estonia. We should not become closed, instead we should focus on innovation and new growth through great entrepreneurs and leaders and create the environment where they will invest more money in Estonia, not an environment where they invest less and leave. Reply to the comment answer
~Bob [13.01.2013, 12:45]
rate it
answer
Reply to the comment
We need more good ideas, lets keep trying. Maybe this one is not the best, but at least Tanilas is standing up and saying something, for which he should be supported.

However, about the idea: "Estonian Monaco" sounds nice as a catchy headline, but the reasoning is not sound. Removing personal income is a populist move but not structurally correct.

First, since the tax income loss is small, it means additional consumption is also small. 300m Euro is quoted, but businesses, both local and foreign can bring in billions of Euros, many times more - so by taxing them and encouraging THEM to move to Monaco = Estonia loses.

The top rich people are basically businesses themselves. They act through businesses, not personally, so taxing business encourages them to go elsewhere.

Taxing foreign companies more than local. Really, if Estonia was America and had the highest GDP in the world perhaps it can afford to lose all foreign investments, but to start to attack foreign people and investments is very politically popular but again, eventually the Estonian people lose. Think about the end point of this closed policy - Romania's Nicolae Ceaușescu.

Second, the idea that suddenly many wealthy people will come to Estonia and spend huge sums here is quite unlikely. Monaco is warm, on the sea and you have all the products of France in the region. Estonia has a small range of restaurants, products and opportunities to spend money. Most of the consumption would still go abroad. Some would come yes, but enough to balance billions of business investment? Unlikely.

Third, playing with tax in this way goes against the developing EU regulations, so Estonia would eventually be fined.

In summary then, it is better to support business because the business generates more income which drives the economy and pays more to the people. An open policy has been working well for Estonia. We should not become closed, instead we should focus on innovation and new growth through great entrepreneurs and leaders and create the environment where they will invest more money in Estonia, not an environment where they invest less and leave. Reply to the comment answer
~bob [13.01.2013, 13:03]
How about a better idea?

Lots of hard work, cut out the crap from the bankers who have shown themselves clueless every time for the last 10 years.

The whole idea you can live off Euro subsidy while talking rubbish (called good ideas) is a total shit way to progress.

Go visit China some time, then come back with the twaddle about "Monaco" or maybe "Macau".

Of course no-one in Tallinn wants to do a hard day's work.
Wannabees were always this way.

All talk and no trousers.
~lots of stupid people [13.01.2013, 18:41]
You talk about hard work but you are the loser who couldn't make here (in Ida Virumaa of all places), so who can take your worthless words for anything? How's the ex-wife doing?
~@esti=NO [13.01.2013, 21:55]
Who says Estonians don't work hard?

Just how hard the Propaganda Ministry works, monitoring these comments 24/7 and responding swiftly to any subversive comments! :-D
~@lots of stupid people [14.01.2013, 01:55]
rate it
answer
Reply to the comment
At least someone is trying to give input for reform, but I am surprised that a banked give such statement.
Estonia should become like netherlands, not like Monaco.
To cut personal income tax is an unnecessary gift to the population, and as the author suggest, the lost income should be recovered from higer excise on tobacco and alcol and higher vat, tax that would affect the population, so at the end, an almost zero sum game.
Estonia should try to attract holding company, strengthening the banking sector, introducing a new notarial law, and changing the tax law, making it more favourable for companies and holding to establish their headquarters in Estonia. This will create a lot of high qualified workplace for estonians end needs for qualified services.
From the personal income part, the government could eventually think about a special taxation for the so called "High-net-worth individual", in order to get same extra income attracting rich people persuading them to move their residency to Estonia.
Also Estonia could think about special law for improving maritime and aeronautical registration. Reply to the comment answer
~Ugoz [15.01.2013, 00:11]
rate it
answer
Reply to the comment
What would the average Elmar in Tartumaa think if some wealthy arabs buy up all land around his favourite fishing-lake? And perhaps build a palace, and... a Mosque :O

Some years ago a very black friend of mine stepped into Mc Donalds in Tallinn and all activity stopped. I'm sure things have changed a bit since then. But I do not in any way believe that estonians are ready to make their precious homeland an entrepôt for the wealthy in the world. In Monaco, monegasques are a minority. THAT particular proscpect will be extremly hard to sell in to Estonians who first fought to deport as many russians ans possible and now try to assemilate the ones still left. Reply to the comment answer
~Rootslane [15.01.2013, 00:44]
Not arabs, but Chechens. Estonians still admire Dudayev, so it wouldn't be a problem for tax evading Kadyrov and his goons to buy land there.
~Kadirovs lambos [15.01.2013, 17:14]
rate it
answer
Reply to the comment
Estonia has less economy than a single city within the EU… less than almost any bigger city within Europe, and still Estonia wriggles forward as a country which actually is amazing. But being the only EU country with zero company tax on profits it do seem strange that no more companies has come here yet. So, on the other hand, should companies pay 10-15% tax on their profits; I do not think that it would scare those away that are already here, as it would still be much cheaper than in other countries, and it seems that the zero tax has not been the reason they are here.
Of course, no personal income tax may not be feasible, but it is a good idea to throw new and daring aspects into the ring, as surely Estonia needs something to happen, before at least its countryside is totally drained from funds, and poverty and desolation fully take over all areas outside Tallinn and Tartu, placing Estonia as an even more “third-world-country” within the EU, as it already is. Something has to be done to make the negative stamp of “Eastern Europe” go away. Reply to the comment answer
~BD [15.01.2013, 12:00]
Ten percent of Estonia's state budget is EU aid. Government supports half of the companies. If anything Estonia is just a slightly more advanced version of Zaire or Mozambique.
~there you have it [15.01.2013, 17:16]
There is corporate income tax, but it's paid at the time dividends are taken, and not when the profits are earned. So reinvested profits are not taxed.

When the profits (as dividends) are taxed, the rate is 26.58%, which is one of the highest in the EU. In fact, only Belgium (33.99%), France (33.33%), Luxembourg (28.59%) and Spain (30%) have higher corporate income tax rates:
http://en.wikipedia.org/wiki/Tax_rates_of_Europe

That said, I don't think taxes are the solution. If so many Estonians are emigrating, then they first need to focus why people who have the most reasons to stay (Estonians) are leaving, and only after fixing that will they have any hope of attracting people with no attachment Estonia to immigrate.
~ameeriklane [15.01.2013, 17:35]
True... there is tax at payment of dividend... however many other countries also have this... that the person who receives the dividend is taxed from this, with personal capital tax...
However, in other countries, the company has previously been taxed from its profit... and thus a double taxation is taking place... this is very common... except in Estonia... so the corporate tax is de facto amongst the lowest anyway...
True… there is tax at payment of dividend… however many other countries also have this… that the person who receives the dividend is taxed from this…
However the company has previously been taxed from its profit… and thus a double taxation is taking place… this is very common… except in Estonia… so the corporate tax is amongst the lowest anyway…
Example Sweden, where the profit tax 2013 is 22%... but the personal capital tax of dividend is 30%... this leaves the total tax on companies profit to be 38,4%... and thus much higher than in Estonia...
~BD [15.01.2013, 22:53]
Sorry... in Sweden it should be 45,4%... but then you have different allocation to accrual funds, that can postpone the taxation and also lower it... so around 40% may be the fact in Sweden... and in many other EU countries actually...
~BD [15.01.2013, 22:59]
rate it
answer
Reply to the comment
why not transform estonia in Cuba? with sun and beautiful beaches?
the proposal is ridiculous Europe should forbid this fiscal paradise policy where big corporations, and shady businessmen hide their dirty money. Reply to the comment answer
~mrMe [17.01.2013, 16:39]
rate it
answer
Reply to the comment
Main news